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FTC Shuts Down Domain Name Registration Scam

Published August 10, 2010

The USA Federal Trade Commission (FTC) has shut down a Canadian company that posed as various domain name registrars in order to fleece U.S. consumers and businesses for non-existent services.

The fake invoices issued by the company were designed to look as though they came from the targets' existing domain name registrar.  The documents directed the recipients to pay for an annual listing and search engine optimization services. The FTC found the "invoices" in some cases led people to believe that non-payment would lead to a lapse in registration of their domain name.

The FTC states that most consumers who paid the bogus invoices did not receive any domain name registration services and the search engine optimization service did not result in increased traffic.

A federal district court judge in Chicago ordered a halt to the operations of the firm and froze the defendants' assets, pending trial. The settlement order includes a suspended judgment of over USD$ 4 million, based on the level of injury caused to consumers by the company's activities. However, based on the inability of the settling defendants to pay, they will turn over $10,000 to satisfy the judgment.

Domain name registration scams are unfortunately quite frequent. The most common scam is whereby a domain name registrant is sent an invoice for renewal of a domain name by a party other than their own registrar. The "renewal" is instead a transfer to the new company - and usually costing the consumer far more than under their original registrar. Registrants should always check the authenticity of any documents they receive in relation to their domain names.

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